Wizzard, which consists of a digital media and podcasting arm, and healthcare and speech recognition, is currently spinning off its health care assets in order to focus on its media business.

Wizzard is buying 100 percent of the outstanding shares of the Chinese firm Digital International Entertainment Ltd. (known as FAB) in exchange for 49 percent of Wizzard’s outstanding shares. Additionally, FAB will gain two board seats and the combined company will change its name after closing the deal.

FAB founder and CEO Zhang Hongcheng will become chairman of the combined company’s board. Wizzard’s existing CEO, CFO and president will stay with the company.

Also, FAB will be able to acquire up to 78 percent of the outstanding shares of the combined company after certain financial milestones are met in 2011 and 2012, according to a agreement filed with the Securities and Exchange Commission.

“We have been looking for the right international partner to help grow and monetize our digital media distribution business and with FAB we have found a high-growth company with outstanding leadership and innovative technology products uniquely positioned in the world’s largest consumer market,” said Chris Spencer, CEO of Wizzard, in a written statement. “FAB is in the process of leveraging its well-known and reputable retail media brand into a growing online and kiosk-based media distribution network. The best way to describe FAB is - Best Buy meets iTunes meets Redbox. We believe FAB has the opportunity to dominate mobile digital entertainment delivery throughout China as it currently does through its wholesale and retail media distribution business.”

FAB has three of its own retail stores and supplies thousands of retail outlets across China and is growing its business to distribute media in kiosks, according to a written statement announcing the merger.

“The combination with Wizzard represents a true win-win scenario that significantly expands the global reach and growth opportunities for both companies,” said Zhang in a written statement. “As a result of this transaction, Wizzard would instantly avail itself of FAB’s powerful digital media distribution channels in China, one of the world’s fastest-growing and biggest media markets, while simultaneously FAB would be in a position to benefit from Wizzard’s advanced media technologies and its U.S.-based media partners who want to access China and its massive consumer market.”

In Wizzard’s most recent quarterly filing with the SEC, which was the first quarter ended March 31, the company had a narrowed its net loss year-over-year to $367,898, or 1 cent per share. That compared to a loss of $695,439, or 2 cents a share, in the year-ago period. Sales for the first quarter were up 20 percent year-over-year to $1.6 million.

The company has had consistent annual losses. According to its 2010 annual report to the SEC the company had a: